Question : Prepare Cost of Goods Sold Statement for the year ended Dec 31st, 2009 by adjusting the closing inventories of work in process, finished goods and material. Also show complete working where required. (15 Marks)

Company : China Toys Manufacturing Company Ltd.,
Details : Cost of Goods Manufactured and Sold Statement.
Period : Ended on 31st Dec, 2009
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Question # 02 - Income statement for the year ended Dec 31st, 2009. (5 Marks)

Company : China Toys Manufacturing Company Ltd.,
Details : Income Statement.
Period : For the period ended on 31st Dec, 2009


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Calculation Sheet - Cost of Goods Manufactured and Sold Statement
Reverse Calculation (a):-
Net Sale = 218800-2800 = 216000
Net Sale = Cost of Gods Sold+ Gross Profit
216000 = Cost of Goods Sold+30% of Sale
216000 = Cost of Goods Sold+30% of 216000
216000 = Cost of Goods Sold+64800
216000-64800 = Cost of Goods Sold
151200 = Cost of Goods Sold …………………………………(a)

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Reverse Calculation (b):-
Conversion Cost = Direct Labour + Factory Over Head
Conversion Cost = 70%+30%
Conversion Cost =70%35000+30% of Conversion Cost
Total Conversion Cost = 35000*100/70
Total Conversion Cost = 35000*100/70
Total Conversion Cost = 50000
Factory Overhead = 30% of 50000
Factory Overhead = 50000*30/100
Factory Overhead = 15000………………………………………….(b)

Reverse Calculation (c.) :-
Calculation of Prime Cost =150000*60/100 = 90000………………….(c)


Reverse Calculation (d):-
Selling Expenses 5% of Net Sale
= 216000*5/100 = 10800…………………..(d)

Reverse Calculation (e):-
Administration Expenses 8% of Net Sale
= 216000*8/100 = 17280-----------------------(e)